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Mail Theft-Related Check Fraud is on the Rise – Protect Your Business

February 2025

Mail Theft-Related Check Fraud is on the Rise - Protect Your Business

Kelley Schwartz
Senior Vice President
Treasury Management

In an increasingly digital world, it may come as a surprise that check fraud is not only still prevalent but also on the rise. Businesses of all sizes are being targeted, and the FBI and USPS are warning that a significant volume is enabled through mail theft, posing significant risks to businesses.

In September, the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) issued a financial trend analysis on mail theft-related check fraud incidents based on Bank Secrecy Act (BSA) data filed in the six months following FinCEN’s issuance of its 2023 alert on the topic. During the review period, FinCEN received over 15,000 reports on mail theft-related check fraud, amounting to more than $688 million in reported suspicious activity.  Check theft occurs several ways as fraudsters gain access to legitimate checks and sensitive financial data by stealing mailed checks from USPS facilities or during delivery to the intended recipient.

Criminals are employing sophisticated techniques, such as chemically washing stolen checks to alter the payee information, leading to the unauthorized redirection of funds and potential financial losses for companies. Stolen checks are deposited, often by a collusive account holder who is recruited by the fraudster or sold online for a fraction of the face value to other criminal actors who deposit the checks. In many cases, financial institutions, consumers, and law enforcement agencies are not aware of the fraudulent activity until after funds have been illicitly withdrawn.

The recovery process can be challenging and protracted. The Bank of First Deposit may take several months to respond to fraud affidavits and check recovery requests. Presently, there is no banking regulation mandating a specific deadline for response, leaving businesses vulnerable to potential delays, and extended financial exposure.


To mitigate the risks associated with check fraud, we strongly advise businesses to take the following preventive measures:

    1. Enroll in Positive Pay: Businesses can take advantage of their bank’s Positive Pay service, which helps match issued checks against presented checks to identify discrepancies and prevent fraudulent items from being processed. 
    2. Avoid Mailing Checks: Do not put checks in mailboxes but rather bring them into the post office. Check theft issues have prompted the USPS to advise that Americans avoid depositing mail in blue collection boxes or leaving it in their own mailboxes for a carrier to pick up, especially overnight. Instead, the agency is now recommending that patrons enter their local post office to send mail securely. 
    3. Monitor Account Activity Regularly: Daily reconciliation is key to being able to recover fraudulent checks rapidly. If a fraudulent check is caught within 24 hours of clearing your account, it can be returned to the Bank of First Deposit through normal banking processes.
    4. Pay with ACH: ACH payments are an efficient, cost-effective, and secure way to send money. ACH transfers are more secure than paper checks because they are electronic and do not require physical transportation or handling. 

While no system is foolproof, implementing strong financial controls and staying informed about emerging fraud trends can significantly reduce your risk. Work closely with your bank to leverage fraud prevention tools and respond quickly to any suspicious activity. In today’s landscape, a proactive approach is your best defense against check fraud.

Kelley Schwartz
Senior Vice President
Treasury Management
 
A dedicated treasury management partner, Kelley proactively helps our clients address challenges to their payment processes, streamline receivables and payables, strengthen controls, and enhance security. She provides valuable education on current treasury management tools and fraud protection. Kelley develops a thorough understanding of each client’s specific issues, and is truly vested in helping them succeed.
 





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